According to Gartner, roughly two thirds of all servers sold are shipped with Microsoft’s server software. Each generation is more powerful and sophisticated in what it can handle, the latest being the highly anticipated release of Microsoft Server 2008 that came out in February of this year.

For the smaller business, prices start around $1,000 for the standard version and just under $500 for the no frills Web-only server application. Depending on the company’s size and budget, those Windows-based servers can be a major expense.

It probably wouldn’t please the average business owner to know those servers, for all that sophistication and computing power, are likely running at less than 20 percent utilization.

In other words, imagine a rack of five servers totaling over $5,000 in software and collectively they are running at the full capacity of just one of those servers, while the power of four servers sits idle and unused.

“Windows servers have become more powerful over the years. Most applications just don’t require all that extra power,” says Frank Scavo, president of Computer Economics based in Irvine, Calif. Scavo points to Unix and Linux servers as more efficient running at about 50 percent utilization -- significantly better than Microsoft, but still woefully under used as a resource.

The much-talked about trend, virtualization, is one way to get more bang out of your server bucks. But there are more reasons to virtualize, as you'll see below.

Virtualization 101

Traditionally, IT departments organize their servers by task. Typically there’s an e-mail server, a file server, perhaps an accounting server, and even a server for all the printing. With virtualization, tasks are handled across multiple machines and even platforms, instead of the one task, one box approach.

“Think about it at the desktop level. The more applications that are open, the more likely it’s going to freeze up and crash. You don’t need that on your servers,” says Scavo.

To the end user, the alternative is a seamless experience. Virtualization happens on the backend. It’s the ability to integrate resources, leverage them together to handle a single functionality, and all but eliminate down time since one server covers for another if there’s a problem. A company might use multiple servers to replicate a backup data base off site or handle more complex applications.

These days, virtualization is often mentioned in the same breath as cloud computing. To make a distinction between the two, cloud computing is a data grid of perhaps thousands of computing devices used as needed by outside users and organizations. It’s a nimble way to scale up and down with user demands.

Virtualization is the programming that handles the mechanics of that. Virtualization is not limited to cloud computing, which is virtualization on a grand scale. Smaller organizations can take advantage of this strategy on a much smaller scale with as little as only a few servers involved on site.

Whether its through a subscription based service with a cloud computing provider, like Amazon.com’s new Elastic Compute Cloud (EC2) service, or implementing some virtual machine software (VMWare) on site, virtualization is quickly becoming a very attractive option for businesses and organizations of all sizes. Here’s why:

Increase server utilization. As highlighted by Scavo, this is the heart and soul of virtualization. Getting the most out of your available computing power to accomplish whatever the task may be, whether it’s creating redundancies or enabling the network to handle more complex applications by allowing them to multi task across multiple appliances.

Decrease spending. Virtualization saves money by requiring fewer servers to do more. “Through virtualization, companies can consolidate their server population on average by 25 percent. I know of one company that went from 18 servers to three and saved $90,000,” says James Browning, a vice president of research at Gartner

Conserve energy. Servers and computers generate a lot of heat and at the same time easily break down if they aren’t kept almost refrigerator cool at all times. There’s a reason why IT professionals tend to wear long sleeves year round. The data room is typically chillier than football in November. With the rising costs of utility bills as a factor for every business right now, virtualization can be a fast track to big savings. That same company noted by Browning that saved $90,000 by reducing its number of servers; saved another $10,000 annually in utility bills.

Safeguard data. Archiving data and replicating the network off site through virtualization is a recipe for an all but bullet-proof disaster recovery plan. Plus, it’s competitively priced compared to some of the other popular backup choices for small to midsize companies, like using a storage area network (SAN) or disc to disc backup.

Increased flexibility. As mentioned already, by automating computing tasks across multiple sources, the likelihood of downtime is almost non-existent. If one source fails, another picks up the slack. Additionally, the IT department no longer has to be married to one single platform. “With virtual servers, you can run multiple operating systems, like Windows and Linux, on the same physical server,” points out Scavo.

SIDEBAR: Getting started

Every company’s computing needs are different and no one understands those unique needs better than the IT staff or consultant already managing the network. Business owners should encourage them to research virtualization, looking at case studies of what it’s done for organizations of similar size and corporate mission.

Scavo highly recommends laying out the investment for a little training, as well. Send your IT manager to a conference or have a client representative from one of the VMWare vendors, like EMC, come on site to demonstrate what their product can do.

As for Microsoft and those Windows servers running at 20 percent capacity, those days might soon be over with the release of Hyper-V when it comes out later in 2008.

Hyper-V technology, designed to partition virtual functions away from the processor, is Microsoft’s VMWare solution to get more out of their servers. At a thousand dollars a pop for entry level versions of Server 2008, that’s a good thing.